Introduction to Term Insurance Maturity Benefits
We all want to make smart financial choices, especially when it comes to protecting our family’s future. Term insurance is one of the simplest and most affordable ways to do that. But what happens if you outlive your term insurance policy? Do you get your money back?
The answer is: it depends. While traditional term insurance does not offer anything at maturity, there’s a version that does — it’s called Term Insurance with Maturity Benefits or Term Insurance with Return of Premium (TROP). In this guide, we’ll dig deep into how it works, its pros and cons, who should go for it, and more.
What is Term Insurance?
Term insurance is a pure protection plan. You pay a small premium every year (or month), and in return, your nominee gets a large sum of money if you pass away during the policy term. It’s simple, affordable, and highly effective.
But standard term insurance is a “no return” product — if you survive the term, there’s no maturity benefit.
Traditional Term Insurance vs. TROP
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Traditional Term Plan: Life cover only. No maturity payout.
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TROP Plan: Life cover + return of total premiums paid (minus taxes/rider charges) at the end of the term if you survive.
Understanding Maturity Benefits
What Are Maturity Benefits?
Maturity benefits refer to the lump sum you receive if you outlive the term insurance period — but only if your policy offers it.
When Do You Receive Maturity Benefits?
At the end of the policy tenure — say after 20, 25, or 30 years — provided no claim was made during the term.
Types of Term Plans That Offer Maturity Benefits
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Term Insurance with Return of Premium (TROP)
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Some Customizable Term Plans with Add-ons
Term Insurance with Return of Premium (TROP)
How Does TROP Work?
You buy a plan, pay regular premiums, and if you live through the entire term, all your premiums (excluding GST or rider costs) are refunded to you.
Features of TROP Policies
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Full life cover during policy term
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100% premium refund on survival
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Optional riders available
Benefits of Choosing TROP
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Acts like a savings plan
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Peace of mind — you get something back
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No financial loss if you survive the policy term
How TROP Differs from Pure Term Plans
Premium Refund vs. No Refund
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TROP refunds your premiums
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Pure term plans offer no returns if the insured survives
Cost Comparison
TROP premiums are 2x to 3x higher than pure term plans
Suitability for Different Policyholders
TROP is better suited for risk-averse buyers who want a return on investment. Pure term is better for those prioritizing large cover at a lower price.
Key Advantages of Term Plans with Maturity Benefits
Financial Discipline and Security
You stay committed to long-term savings while protecting your family.
Return of Premium as a Savings Element
It’s not just protection — you get your money back, almost like a no-loss policy.
Risk-Free Benefit at Policy End
If no claim is made, you get your entire base premium back — it’s a win-win.
Limitations of Term Plans with Maturity Benefits
Higher Premiums
You’re paying more for the comfort of getting money back.
Limited Investment Returns
Your refunded premium doesn’t earn interest — it’s not an investment product.
No Interest or Growth on Returned Premium
Unlike mutual funds or ULIPs, the refunded amount is fixed.
Tax Benefits of Term Insurance with Maturity
Section 80C Deductions
Premiums paid are eligible for tax deductions up to ₹1.5 lakh per year.
Section 10(10D) Exemptions
Maturity proceeds are tax-free if the premium is less than 10% of the sum assured.
Implications in Budget 2024-2025
As per the latest tax rules, high-value insurance policies may have limits on tax exemptions — check with your advisor for updates.
Real-Life Example of Maturity Benefit in Term Plan
Case Study – Policyholder Survives the Term
Anil buys a TROP with ₹50 lakh cover for 25 years, paying ₹20,000/year. At the end of 25 years, he receives ₹5,00,000 (total premiums paid).
How Much Is Received?
Exact refund = Total premium paid – taxes – rider premiums (if any)
Best Candidates for Term Plans with Maturity Benefits
First-Time Policy Buyers
TROP is appealing to those who want both protection and returns.
Risk-Averse Individuals
If you’re not comfortable with pure protection-only plans, this one’s for you.
Parents with Young Children
Long-term security + return of money to support future financial needs.
Popular Insurers Offering TROP Plans in India
Kotak Life
Offers affordable TROP plans with flexible term options and return features.
LIC, HDFC Life, ICICI Prudential
These insurers also offer well-structured TROP policies with wide coverage.
Comparison at a Glance
| Company | TROP Plan Name | Minimum Sum Assured | Premium Refund |
|---|---|---|---|
| Kotak Life | Kotak e-Term Plan w/ROP | ₹25 lakh | 100% base premium |
| HDFC Life | Click 2 Protect Life | ₹50 lakh | 100% base premium |
| LIC | Tech Term + ROP Option | ₹25 lakh | 100% base premium |
Things to Keep in Mind Before Choosing a TROP Plan
Read the Fine Print
Understand what exactly gets refunded and what doesn’t.
Understand Policy Terms and Conditions
Check the lock-in period, grace period, claim exclusions, etc.
Assess Long-Term Affordability
TROP premiums are higher. Make sure it fits your financial plan.
How to Claim Maturity Benefits
Documents Required
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Original policy bond
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ID proof
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Bank details
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Maturity claim form
Claim Process Overview
Submit documents to the insurer → Verification → Amount credited to your bank
Timeframe for Benefit Disbursal
Usually within 7–15 working days after policy maturity
Alternatives to TROP Plans
Term Plan + Mutual Funds
Buy a pure term plan and invest the premium difference in SIPs for higher returns.
ULIPs and Endowment Plans
ULIPs offer market-linked returns; endowment plans offer guaranteed returns + bonus.
Comparing Long-Term Returns
TROP = Low returns, high protection
Mutual Funds/ULIPs = High returns, moderate risk
Conclusion
Term insurance with maturity benefits, especially the TROP variant, gives peace of mind to those who want some form of return on their premium. While the premiums are higher and the returns are not comparable to investments, the guaranteed refund acts as a safety cushion. It’s ideal for cautious individuals who value the security of having something back at the end of the term.
Remember — insurance is about protection first. Returns are a bonus.
FAQs on Term Insurance Maturity Benefits
1. What happens if I survive my term insurance policy?
If it’s a pure term plan, you receive nothing. If it’s a TROP, you receive your total base premiums back.
2. Is TROP worth the higher premium?
If you’re risk-averse and want some money back, yes. But pure term + investments usually give better returns.
3. Are maturity proceeds from term plans taxable?
No, maturity payouts from TROP plans are tax-free under Section 10(10D), provided policy conditions are met.
4. Can I convert my existing term plan to TROP?
No, existing plans usually can’t be converted. You’d need to buy a new TROP policy.
5. Is the premium refund amount fixed?
Yes, you get the base premiums paid back. Taxes and rider charges are not refunded.
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